HONG KONG • Siam Commercial Bank (SCB) has entered into exclusive talks with Hong Kong insurer FWD Group to sell its life insurance arm, which could raise US$3 billion (S$4.19 billion) for Thailand's third-biggest lender, people with direct knowledge of the matter said.
A successful deal would rank as the largest insurance M&A transaction in South-east Asia, and the biggest in Asia since the merger of two insurance companies in India valued at US$3.2 billion in August last year, according to Thomson Reuters data.
FWD, owned by Hong Kong tycoon Richard Li, the younger son of Asia's richest man Li Ka Shing, entered into exclusive talks last month, and a decision is likely by the end of next month, three people said.
If the deal were to fall through, SCB could consider new bidders, they told Reuters.
South-east Asia has emerged as a battleground for foreign insurers attracted by the region's lower insurance penetration levels and faster growth rates for life insurance premiums than in their home markets.
The acquisition will help FWD expand its existing wholly owned insurance business in Thailand, which started in 2012 and had total assets of about 74.7 billion baht (S$3.07 billion) at the end of 2015, data on its website showed.
Spokesman for FWD Group in Hong Kong Aaron Pan declined to comment on "market rumour or speculation", while a spokesman for SCB had no immediate comment.
Five years after selling out of Asian insurance, FWD founder Li returned in 2012 by paying US$2.14 billion in cash for ING Groep's Hong Kong, Macau and Thai insurance operations.
Since then, FWD has grown its presence in the region's fast-growing and under-penetrated insurance sector, expanding into markets including Indonesia, the Philippines and Vietnam.
It now has more than 11,000 insurance advisors and over 1.1 million customers in Asia.
In its most recent Asian deal, FWD agreed in November to buy American International Group's Japan life insurance business AIG Fuji Life Insurance Company for an undisclosed sum.
SCB Life Assurance is among the top insurers in Thailand.
Asian insurance M&A is on the rise, with volumes for the top five announced deals at nearly US$3 billion this year, including the sale of Hong Kong Life Insurance for US$914 million last month.